The Car and Truck Fleet and Leasing Management Magazine

High-Tech Vehicles to Drive Automotive Chip Demand

July 20, 2004

As electronics become the main driver of car innovation, chipmakers will be among the top beneficiaries, analysts say, according to a story by Reuters on July 8. "Because penetration of electronics in cars is still quite low, we expect to see growth (in chip demand) coming from further penetration," said Mike Williams, Research Vice President at Gartner. Global automotive chip demand is expected to double to $24.5 billion by 2008, outpacing the 68 percent growth in the overall chip market, according to research firm iSuppli. Automotive chips already range widely from microcontroller units that help boost energy efficiency to system chips that read fingerprints for keyless engine starts, and to sensor chips for climate control. Analysts say there is much room left for further chip-led innovation in automobiles. "Electronics is where car makers can really start to do innovation and they can differentiate their cars from competition," said Drue Freeman, vice president of global automotive marketing and sales at Philips Semiconductors, a unit of Philips Electronics. "Also, the use of more electronics and semiconductors will actually help reduce the costs that car makers have to spend in building cars (by eliminating mechanical parts)."
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